1. Please show all preliminary computations.

2. please complete the consolidation working papers for Paluee corporation and Subsidiary for the year ended Dec. 31, 2016.

Thanks!!

Paulee Corporation paid $24,800 for an 80% interest in Sergio Corporation on January 1, 2015, at which time Sergio's stockholders' equity consist of s15,000 of Common Stock and Retained Earnings. The fair values of Sergio Corporation's assets and liabilities were recorded book values when Paulee acquired identical to its 80% interest. Sergio Corporation reported net income of $4,000 and paid dividends of $2,000 during 2015. Paulee Corporation sold inventory items to Sergio during 2015 and 2016 as follows 2015 2016 $5,000 Paulee's sales to Sergio $6,000 3,000 3,500 Paulee's cost of sales to Sergio Unrealized profit at year-end 1,000 1,500 At December 31, 2016, the accounts payable of Sergio include $1,500 owed to Paulee for inventory purchases. Financial statements of Paulee and Sergio appear in the first two columns of the partially completed working papers